Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Location: New Albany, Indiana (Greater Louisville)
11,974 posts, read 25,466,576 times
Reputation: 12187
Advertisements
Obviously the economy has affected people in the high income, high population areas much more than it has areas in the Great Plains or South East. I think in Kentucky's cities a house that was worth $130,000 may now be worth $100,000 - this compared to the decline in values in Nevada, Florida, & California where a house might have went from a value of $800,000 to $400,000.
Also, the cost of living is much lower in some areas but unemployment benefits are the same regardless of cost of living. In parts of rural KY you can rent a house for $500 a month - in NYC or LA a studio apartment is $1,000 per month. Obviously a person who us under / un employed is much better off in an affordable area
It all went wrong when people and institutions started living on bubbles. Why is anyone surprised that growth at that rate is not sustainable and the bubble burst? Did you really think housing would continue to go up like it has over the last years?
Why would you want to reverse the downward trend if it gets us back to reality? It's like a guy in the desert who is very happy with his mirage of water. When you tell him it is only a mirage, that he has to turn around and go twice as far for the real water so he decides to just stick with the mirage. Slower, sustainable growth is much better in the long run....but it's going to be painful to get there. Don't worry though, our government doesn't seem to have any intention of preparing for tomorrow by sacrificing today...I'm sure the next bubble (mirage) will be along soon and most people will be happy again.
I agree. Here in NZ everyone speculated on property...heaps of subdivisions on the back of strong capital growth over the last 5 years (to 2007). "You cant go wrong with property...it never loses its value". Mortgages at 100- 105% of a homes value were approved on future capital gain. In addition, there was strong advertising to 'top up your mortgage' for that well-earned holiday, or holiday bach, or boat , or car. Many people took up the offer and why not...money was flowing freely and was cheap.
Now property values are falling with many homes at lower values than the mortage against them. And with the recession, there are now high risks that income will not be sufficient to service the mortgage. It was only a matter of time before a correction had to happen...you cant go on growing debt on wealth that doesnt really exists.
The sad thing is that those astute people who did put money aside for retirement or for future consumption now are also paying the price. And young people(20's) who have not known what hard times are and have had access to cheap money, will now have to experience the hardships that will come with the correction. It'll be a painful process but the reality is we need to get back to the situation where we do not consume more than we earn.
But as you say, the cycle will begin again some stage and a new generation of folk will be sucked into it (I think the current generation will be much more cautious in the future).
It's funny, a lot of people I know opted to go to grad. school even though they originally weren't planning on doing so instead of trying to enter a shaky job market. Gen Y are going to have a high proportion of masters and Ph.Ds.
Likewise in NZ. Earlier this year there was an article in the newspaper about siginificant increases in school rolls as students headed back to school after the summer break rather than going to work because of the lack of jobs.
I agree. Here in NZ everyone speculated on property...heaps of subdivisions on the back of strong capital growth over the last 5 years (to 2007). "You cant go wrong with property...it never loses its value". Mortgages at 100- 105% of a homes value were approved on future capital gain. In addition, there was strong advertising to 'top up your mortgage' for that well-earned holiday, or holiday bach, or boat , or car. Many people took up the offer and why not...money was flowing freely and was cheap.
Now property values are falling with many homes at lower values than the mortage against them. And with the recession, there are now high risks that income will not be sufficient to service the mortgage. It was only a matter of time before a correction had to happen...you cant go on growing debt on wealth that doesnt really exists.
The sad thing is that those astute people who did put money aside for retirement or for future consumption now are also paying the price. And young people(20's) who have not known what hard times are and have had access to cheap money, will now have to experience the hardships that will come with the correction. It'll be a painful process but the reality is we need to get back to the situation where we do not consume more than we earn.
But as you say, the cycle will begin again some stage and a new generation of folk will be sucked into it (I think the current generation will be much more cautious in the future).
Yup, that sounds about like what was going on here. However, over the last few years we have been aggressively paying down our mortgage. How stupid!! We could have leveraged against the value instead. Even our IL's sent us articles about how ordinary people get rich using their home as valuable leverage. Well, we didn't listen to any of them and are very close to owning our home now. I can't think of a more secure position to be in as lots of 'ordinary people' are suffering now, trying to hang on to their homes. Once the mortgage is paid we could work minimum wage jobs and be just fine.
Yes, we also saved a lot as well. I don't like to look at the numbers and DH just keeps hoping we have hit the bottom. Our goal of early retirement (from corporate America) is looking completely unfeasible at this point. When this whole mess started to unfold I was thinking how glad I would be to be done with the mortgage in just a few short years. Now I wish we had been more aggressive in paying it off as a few short years could seem like a very long time.
Yup, that sounds about like what was going on here. However, over the last few years we have been aggressively paying down our mortgage. How stupid!! We could have leveraged against the value instead. Even our IL's sent us articles about how ordinary people get rich using their home as valuable leverage. Well, we didn't listen to any of them and are very close to owning our home now. I can't think of a more secure position to be in as lots of 'ordinary people' are suffering now, trying to hang on to their homes. Once the mortgage is paid we could work minimum wage jobs and be just fine.
Yes, we also saved a lot as well. I don't like to look at the numbers and DH just keeps hoping we have hit the bottom. Our goal of early retirement (from corporate America) is looking completely unfeasible at this point. When this whole mess started to unfold I was thinking how glad I would be to be done with the mortgage in just a few short years. Now I wish we had been more aggressive in paying it off as a few short years could seem like a very long time.
Likewise. Weve hit our mortgage hard over the last 5 years and over this time kept investment to a minimum in the sharemarket (thank God). We did invest in some property but that was pre-boom times so its value is still in positive territory. We are not too bad.
Mortgage rates are on their way up again here - 5 year fixed rates have increase 0.75% over the last week to 7.25% due to cost of overseas credit! so it looks like we are about to start being squeezed again on our mortgage. Bugger!!!
If you have a job, and aren't trying to sell your house, the lifestyle hasn't changed much. There are a lot more people out of work, including professionals, and it's hard to sell a house and make much of a profit if you bought it within the last 2-3 years. If you bought a while ago, you're better off if trying to sell. Our investments aren't worth as much, but hopefully before we retire the market will go back up.
...and aren't trying to retire and have all your retirement $ in a 401k, or pay for college and all your savings are in stock and money market funds.. I really feel for those folks.
It's not as bad as the government's reaction to it.
Thats an interesting comment. I wonder if printing money and bailouts is the right thing to do. Shouldnt we just let the market adjust. Sure its going to cause a lot of pain and hardship, but trying to spend your way out of a recession ... I dont know? It seems trying to maintain an unsustainable lifestyle is not the way to go. I think we all need to take check of our lifestyles and start to consider our needs rather than our wants. An interesting phenomonen over here is that people are starting to be more selective in what they buy...value for money rather than cheap junk.
What I have noticed is fewer people at the malls (in general) and more people at places like Wal Mart, Kohl's, etc. Just yesterday I went to Target and it was dead. This is in the Denver metro area.
Really? I'm outside of Denver but we do go shopping down there, and I've been amazed at how busy the malls have been some days. We were just at Colorado Mills last weekend and the parking lot was probably 70% full.
I think that most Americans have been unaffected by this economic downturn (unless we look at our retirement funds or investments). But I'm sure most of us know someone who's lost their job or is struggling more than they were. We hear horror stories here all of the time too, and for those individuals and families their lives have been turned upside down. There are people who have lost their homes and have nowhere to turn, but it really is a very small percentage.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Slower, sustainable growth is much better in the long run....but it's going to be painful to get there. Don't worry though, our government doesn't seem to have any intention of preparing for tomorrow by sacrificing today...I'm sure the next bubble (mirage) will be along soon and most people will be happy again. 
